Small businesses and home users may find that the least expensive route from Office 2003 to 2010 is upgrading to 2007

Thanks to Microsoft's Software Assurance program, many companies with bulk licenses for Office won't need to pay to upgrade to Office 2010. However, smaller businesses (as well as home users) who buy their software box by box are facing a significant sticker price to embrace the new and improved Office. But thanks to something of a loophole in Microsoft's licensing rules, organizations with copies of Office 2003 may be able to save a lot of money by first upgrading to Office 2007 and then moving to 2010.

First, it helps to understand the differences between the licensing rules for Office 2007 and Office 2010. For Office 2007, Microsoft offers upgrade pricing, which means you can get a discount upgrading to certain versions of the suite if you're running certain versions of Office 2003. With Office 2010, however, Microsoft has abandoned upgrade pricing. When you buy Office 2010 for a particular PC, it doesn't matter at all whether that PC already has a validated copy of Office 2007 or 2003 or 3.1. There's no discount.

Enter the Microsoft Office 2010 Technology Guarantee. Under its terms, if you want to upgrade from Office 2003 to Office 2010, you have to buy, install, and validate a copy of Office 2007. Then if you follow the rules, you get a free upgrade from Office 2007 to Office 2010. Thus, you can effectively move from 2003 to 2010 for the discounted cost of moving from 2003 to 2007.

Going from 2003 to 2007 to 2010 may sound like a hassle, what with the process of installing 2007 and then 2010, but in some cases you can save $200 or more per installation. If your small office has five boxes of Office 2003, you can save $1,000 when you upgrade to Office 2010 Pro -- but you have to act now, before retailers sell out of Office 2007.

If you're already confused, it gets more complicated: Office 2010 has different licensing terms for different versions, and you may want to choose a version specifically because it has terms you need. So the cheapest way to buy a particular version of Office 2010 may involve buying a different version of Office 2007, then using the free Technology Guarantee upgrade. Got your scorecard handy?

Office 2010 comes in eight versions, but if you don't want to buy a volume license, and you don't qualify for the Academic or Military Appreciation Version, you really have two options (legally) for commercial use: Home & Business 2010 (which includes Word, Excel, PowerPoint, OneNote and Outlook); and Pro 2010 (adds Access and Publisher). Each version has licensing quirks that you should consider when trying to figure out the best price for upgrading from Office 2003.